Posted by BMT Micro

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Gift cards have been around for a long, long time in brick and mortar stores, but the idea to create them for ecommerce companies is fairly new. While the general idea is the same, ecommerce gift cards vary from the traditional plastic cards you are most likely familiar with. For large or small ecommerce brands, gift cards can be a unique way to bring in new customers and allow current customers to treat one another or reward themselves. While there are some major advantages to ecommerce gift cards, there are also some factors to keep aware of to ensure safety for you and your customers.

Benefits of gift cards: Before we discuss the potential negatives of ecommerce gift cards, it is important to keep in mind the benefits they can bring you. Customers love to give and receive gift cards any time of the year, not just around holidays. It is a special gift that lets loved ones show the gift card receiver that they know them well enough to know what they like, while allowing them the fun of choosing a specific item themselves. Many customers will spend more than the value of the gift card, as they have extra money to put towards a product or service they might not have wanted to splurge on in the past. Gift cards are also a great way to recruit new customers. If someone who has never shopped with you before receives a gift card, they are more than likely going to spend it. These customers will get a higher sense of satisfaction with their products, as they did not have to spend their own money and therefore are getting a great deal. Gift cards can also help increase brand awareness. If you have a customer who loves your product, they might want to give out ecommerce gift cards as a present to their friends and family with similar interests. This expands your audience, and can be a great source of advertising.

Precautions for gift cards: Ecommerce gift cards can often be very easy for thieves to steal. Since there is no physical card, nor it is attached to any personal information, these digital cards are an easy target. If an ecommerce gift card is stolen, it is very difficult to trace the culprit. Criminals also like to take advantage of high volume times, such as during a big sale or near the holidays, so companies are busy and even less likely to notice suspicious activity. These criminals are also know to re-sell the gift cards for profit. If your gift cards often get stolen and the customer is left without reimbursement, this can also lead to negative reviews for your company and loss of customers.

Fraud tactics: There are many ways that criminals will try to steal from your company. Stealing data and fraudulent chargebacks are two of the most common ways. Chargebacks alerts can take up to 180 days to reach the merchant, and criminals take advantage of that time frame to use stolen information to purchase gift cards. They then sell them to make a profit for themselves. By the time they are caught, the damage has been done and it is very difficult to remedy the situation. More experienced criminals will even go to far as to take over customer’s accounts, and have emails and calls re-routed to themselves. This allows them to make as many purchases and transfers as they want, with less suspicion. Bots are another advanced form of fraud, which allows criminals to increase the number of attacks in a time period. There are many more tactics criminals use to commit fraud, and it is helpful to be aware of them.

Fraud prevention: Despite criminals trying their best to swoop in and steal your money, as well as your customer’s money, there are precautions you can use to deflect them. Before you start selling digital gift cards, develop a plan to help you account for all contingencies. Set several fraud detection points in to trip up criminals and allow you more time to catch them. You want it to be difficult and layered, so that is it not worth their time to hack you or your customers. Two factor authentication is a popular and easy way to help prevent fraud by sending a conformation via SMS or requiring a PIN. Make sure that your fraud prevention accepts all payment types, so criminals are still blocked when you expand into new markets and countries. Set your fraud prevention to allow you complete control to decline, approve, and review all digital interactions. By allowing yourself the option to review everything manually, you are much more likely to catch thieves and stop them from stealing money and information.

Ecommerce gift cards can be a great asset to your business, and very popular with customers. Staying safe and alert allows you and your customers to fully enjoy the benefits of gift cards.